The pay gulf is growing between CEOs and their workers: Michael Shields - cleveland.com

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Guest columnist Michael Shields is a researcher with Policy Matters Ohio.

No matter how much we’re paid, it takes everyone’s work to make an enterprise run. Janitors keep office buildings clean and safe; big clothing chains depend on retail store clerks to interact with customers.

But over the past four decades, CEO pay has ballooned, as shareholders at some of Ohio’s biggest corporations reward CEOs -- and themselves -- instead of fairly compensating the workers who make their profits possible.

A recent report by Policy Matters Ohio looked at SEC filings for Ohio’s 54 largest publicly traded employers, based on the Development Services Agency’s 2018 ranking. The median CEO made 306 times as much as the median worker at the same firm, and 72 percent had pay ratios of at least 200 to 1 -- a share that has climbed each of the past two years since companies began reporting under Dodd-Frank rules.

The national figure is 320 to 1. By comparison, major U.S. corporations paid their CEOs about 21 times as much as a typical worker in 1965, and the ratio was 61 to 1 in 1989.

The average CEO among reporting corporations was paid $14.6 million in 2019, compared with $52,500 for the median worker. Nearly a third of the companies paid their median worker less than $25,000 per year -- below the poverty line for a family of four. The median worker could be part time and is often not based in Ohio.

Retail corporations tend to pay especially low wages. They also put their workforce at risk of contracting COVID-19 on the job, while some offer few paid sick days and put workers through labyrinthine ordeals to claim it.

Walmart and Amazon employees complained of being unable to get paid sick time. Dollar General sent workers makeshift masks made from cut-up T-shirts and allegedly fired a whistleblower from its corporate team.

Only 634 of the Russell 3000 CEOs -- the 3,000 largest publicly traded companies -- took base salary cuts in response to the pandemic recession. Of the 419 that reported the amount in time for analysis, only about 10 percent cut overall CEO pay -- including stocks and bonuses -- by more than 25 percent.

Abercrombie and Fitch announced cuts up to 33 percent for base pay only, but CEO Fran Horowitz drew fire from the AFL-CIO for being awarded 240,701 shares of restricted stock just weeks before Abercrombie laid off most of its in-store workers, including 3,250 Ohioans.

Other employers are booming as COVID-19 isolation changes how Ohioans live. Profits for grocery chain Kroger grew from $653 million to $871 million as of the third quarter. CEO Rodney McMullin – who was paid $21.1 million last year -- said he would not take a pay cut at the same meeting where he announced that frontline workers would lose their hazard pay.

The growing pay gulf shows where corporations’ priorities are: with CEOs and shareholders, above the working people who keep the doors open.

But policymakers need not prioritize lavish CEO pay over wellbeing for the rest of us. Government at all levels can impose tax penalties. Pension funds can vote down executive windfalls in “Say-On-Pay” votes.

And policymakers can mandate hazard and sick pay, and pass a $15 minimum wage that meets the cost of living.

Income inequality is a choice. We all must come together and demand that our leaders choose a future where everyone thrives, not just the wealthy few.

Readers are invited to submit Opinion page essays on topics of regional or general interest. Send your 500-word essay for consideration to Ann Norman at anorman@cleveland.com. Essays must include a brief bio and headshot of the writer. Essays rebutting today’s topics are also welcome.

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The pay gulf is growing between CEOs and their workers: Michael Shields - cleveland.com
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